Are You Ready for Holacracy?

Holacracy is the proclaimed solution to a lot of the problems faced in a traditional office hierarchy of employees, managers, and executives, and most of them are stumbling blocks that any office worker is all too familiar with.

Have you ever noticed implicit rules in your workplace that slow your process down but are taboo to bring up to anyone else? Or the fact that there’s typically one person (invariably a manager) whose decisions trump everyone else’s—even if, sometimes, they’re the wrong decisions?

When these obstacles to productivity seemed baked into a work environment, how do you solve these problems?

Arguably, with a new organizational structure called “Holacracy.”

It isn’t the first idea in the pantheon of “self-management theories” (check out Morning Star Company and WorldBlu, for example) but it’s the one currently gaining traction.

It’s based around the idea that the people who are the closest to a project—the ones in the trenches working on it each day—are the people best equipped to make decisions about that project.

Here’s how they describe themselves: “Holacracy is a new way of running an organization that removes power from a management hierarchy and distributes it across clear roles, which can then be executed autonomously, without a micromanaging boss. The work is actually more structured than in a conventional company, just differently so. With Holacracy, there is a clear set of rules and processes for how a team breaks up its work, and defines its roles with clear responsibilities and expectations.”

Essentially, people who work closely together are put into self-managing teams called circles, instead of a ranking system where some employees are more important to the company than others by default.

In Holacracy, individuals are defined by their roles, which change as needed and are determined by the circle, and everyone shares accountability and responsibility.

When you put it that way, it sounds like a pretty obvious choice, right? That could be why it’s catching on at some high-profile businesses like Zappos and Medium.

But we’re all creatures of habit, and shaking up your organizational chart in a massive way is bound to ruffle a lot of feathers.

So, is it worth it? Does losing managers and hierarchical titles make you more productive? What are the drawbacks?

via holacracy.org

In this article, I’ll explore who’s using the Holacracy structure, if it’s working successfully, and whether or not it might be right for your business.

Who’s using it?

We’re talking the likes of Zappos,Medium, and one failed experiment in a Holacracy-esque flattening of management turned traditional management-hybrid model by Buffer.

Based off of how many users there are of a specific Holacracy-focused software, estimates are around 500 companies are using the model as of December 2013.

The concept was originally invented by a programmer turned startup founder Brian Robertson who developed the system at his software company, Ternary Software.

Is it working?

Well, yes and no.

Companies like Buffer, with all of their transparency on the subject, illustrate that some ideas behind dismantling hierarchy are vital and help companies become more agile right away.

Distributing authority for decision-making to responsible team leaders and delegating leadership tasks away from one single person or tiny group of managers is something every business could implement successfully on some level, and it does make businesses more productive.

But Buffer ultimately had to move partially away from the system because it left employees feeling adrift and confused about where to turn to for mentorship or collaboration, particularly if they were new to the company.

According to the Holacracy official site, “In Holacracy, people have multiple roles, often on different teams, and those role descriptions are constantly updated by the team actually doing the work.”

This level of complexity can overwhelm a group, and if you already have managers, they likely won’t be pleased about losing that title and authority.

For Zappos, the solution for those who were disgruntled was simply to say “my way or the highway—but no hard feelings” with their offer of three month’s severance to any employee that just couldn’t hack it in the Holacracy.

While a generous solution for larger companies, most small businesses can’t realistically handle turnover like that.

Buffer just found that it made more sense to employees and kept work on track to have at least some level of consistent hierarchy, sort of a cherry-picked management style; which is similar to the case at Medium, where the circles in their Holacracy each have a clear leader.

There’s also the question of time commitment. While on the level of iterating and making decisions, Holacracy makes things go more quickly, you’ve also got the creator himself saying that the “journey” of Holacracy can take five years.

Who’s behind it?

The previously mentioned official site of the Holacracy belongs to the parent company HolacracyOne, which aims to help other companies transition into this new style of self-organization.

HolacracyOne was founded by Holacracy creator Brian Robertson, a programmer with a penchant for philosophy.

He was clearly influenced by the writings of Ken Wilber, who coined the term “Holons” to describe what he saw as the natural order of systems in the world.

After Robertson started his own company and wasn’t satisfied with traditional management systems, he developed Holacracy, a mixture of Wilber’s ideas and democracy.

While all of the details are available online and you could make a go at instituting Holacracy on your own at any time, if you do need a hand with implementation, this ostensibly manager-free existence doesn’t come cheap.

Official consultants cost anywhere from $50,000 to $500,000. HolacracyOne also offers seminars and sells the Holacracy-focused organizational software GlassFrog. This was started by an entrepreneur, after all.

There are many different but similar philosophies available, and there’s no one-size-fits-all management style in business.

Things will of course look different from industry to industry and company to company, but even that variation is a sign of the times. We’re embracing being agile and knowing when to pivot, and moving away from more traditional, stringent corporate structures that encourage uniformity.

We can already see that we’ve moved past the old models, and the more that innovative, iterative startup culture persists and tech tools get into the hands of previously marginalized populations, management structures will likely get as flat as possible without impeding speed or growth.

And why shouldn’t they? Your business will benefit, and everyone’s happier.

You can check out the latest episode of our podcast, the Bcast, below. Our hosts Jonathan Michael and Peter Thorsson chat about the recent changes at Zappos, and the CFO of Palo Alto Software, Trevor Betenson, talks about human resources and conflict resolution.